The Goldman Sachs Group, Inc.
) has agreed to sell its operating rights as a designated
market-maker in the New York Stock Exchange (NYSE) to IMC Financial
Markets, according to a report by
The Wall Street Journal
. However, Goldman, which joined NYSE in 1896, will continue to
serve as a brokerage firm for the NYSE-listed stocks.
Based in Amsterdam, IMC (International Marketmakers Combination)
Financial Markets is a high-speed trading firm and operates in over
90 exchanges around the world. Owing to the deal, the company will
recruit 15 floor brokers from Goldman.
The designated market-maker unit or the floor trading business was
added to Goldman's operations when the company purchased Spear,
Leeds & Kellogg, one of the largest trading firms, for $6.5
billion in 2000. Though no official figure has been revealed, the
deal value is expected to be below $30 million.
Goldman's decision to exit this business reflects the ongoing
weakness of the floor trading business. In this arena, a number of
brokers facilitate stock trading in exchanges by providing quotes
(ask/bid price) for buyers and sellers in opening and closing
session of every business day. However, new regulations and strong
presence of electronic trading that facilitates trading with ease
and accuracy, has led to the gradual fading of floor traders who
once dominated the markets.
We believe the initiative is a part of Goldman's strategy to
offload businesses with declining yields and focus more on
Others companies that have sold their market making units in the
past few years include
Bank of America Corp.
Notably, with gradual decline in the floor trading business, there
are a meager six market-makers left on the NYSE floor including
KCG Holdings, Inc.
Goldman currently holds a Zacks Rank #3 (Hold).
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